Choose a reliable Broker:
Although Forex market is the biggest financial market in the world but most of the new traders are not aware of the Forex trading and they even have no idea on where to start and how to start this trading. First and the most important thing is the selection of a reliable broker if you want to enter this market. First of all, go through some important questions that you want to ask when reviewing different brokers. After this have a look at the available features of the different brokers. Compare their features and do online trading on the different platforms.
See if your Broker is registered to Regulated Authority:
You should see whether the broker is registered with any regulatory authorities or not. If the broker is based in USA, see whether he/she is registered with NFA (national futures association) or not. If the broker is based in United Kingdom then he/she should be registered with FSA (financial service authority). If the broker of your choice is not registered with any recognized regulating firm, then think twice before signing up your Forex trading account with him/her. For Indian currency trades strictly see if the broker is registered through SEBI and RBI. Currently the Indian broker are allowed to trade only through MCX-SX & NSE Currency.
Three questions are most important for the selection of a currency exchange broker. Is he/she is a non-dealing desk or dealing desk broker? How wide are the spreads/brokerage charges? Does the broker offer non-fixed or fixed spread? These questions in Forex trading are especially important for those traders who want to take quick profits on a few pips. If the spread offered is variable or large, then the profits of such traders can reduce significantly.
Next important thing to be noticed in currency trading is the leverage offered by the broker. Most of the new traders do not know the fact that “leverage is a killer”. Large leverage can cause great loss if the trade is unfavorable; hence “less is more” can save a new trader.
Minimum Lot Size
Make sure that the broker permits you to start Forex trading with micro lots after practicing on demo account because every broker does not have this feature. Another important thing to be noticed is whether the broker debit or credit daily rolls over the interest? Some brokers in foreign exchange market either deduct interest, do both or neither. This information is especially important for those traders who hold positions overnight. Also see whether the broker of your choice offers premium services like market commentary, charting or news feed.
Always compare the brokers before choosing one. Select at least two brokers that fulfill your criteria and open demo accounts with them. Trade in different market conditions and try to learn all the features of each trading platform. Do not feel shy and ask if you have any question. Most of the Forex trading brokers have excellent customer support service and would answer all your questions. Most of the demo trading platforms are not similar and may have difference in slippage, speed of execution and platform reliability. When you are ready to move to a live trading account, start only with small amount, test your strategies and see if this particular broker fulfills your trading needs.
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